Highlight on Louisiana: State stung by both failed cooperative and West Nile carriers

About 17,000 Louisiana Health Cooperative customers were shocked last month to learn that the company would not be providing any coverage whatsoever in 2016. The company, a not-for-profit created through the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) with $56 million in federal loans, had been the subject of numerous complaints dating back to the beginning of 2014. In the latter half of 2014, the company saw a 23 percent enrollment drop as thousands abandoned the co-op. Still, many relied on the coverage and will have to seek out new options during this year’s open enrollment period. As the surprise is wearing off, the reasons behind the company’s decision to shut down are being explored.

The co-op was formed by a group with experience in the industry, several of whom had been executives with Ochsner Health System. Louisiana Insurance Commissioner Jim Donelon, who is now working with the company and policyholders to ensure that customers are properly served, was originally pleased to see so many experienced individuals become involved, and expected that Louisiana’s co-op would have more resources than most others. Yet, it appears that the cooperative may have paid millions to its board members and executives even before it offered anyone coverage. The co-op paid out over $3.6 million to businesses associated with its board members in 2013 alone, but the compensation did not translate into success. Although almost all co-ops struggled, Louisiana’s coop had the highest rate of dropped enrollment of any co-op in the nation.

The company’s issues were clear and numerous from the start of the coverage period. A mere 17 days into the initial 2014 coverage period, a customer filed a complaint stating that the co-op misrepresented its products. Louisiana Health Cooperative had the highest rate of complaints per customer of all of the state’s major insurers at the end of 2014, with 106 (or 101, depending on the source) complaints filed. The complaint-per-customer rate was almost twice that of Blue Cross Blue Shield of Louisiana (BCBS), which had 45 times the number of customers as the co-op. The most common complaints in 2014 focused on adherence to state rules, claim delay, and access to care. Between January 1 and May 15 of this year, 91 complaints had been filed, with over half related to claim delays.

The company experienced substantial financial losses in its first year, and it finished at $20 million in the red in 2014. Some of this was probably due to enrollment numbers being far lower than projected, with 13,000 in mid-2014. The 23 percent enrollment drop by December 2014 marked the highest percentage loss among all co-ops in the country.

Donelon explained that any new company would find it difficult to break into the market, and the ACA’s effect of substantially changing access to and payment for care made it even harder. Sabrina Corlette of Georgetown University’s Center of Health Insurance Reforms also pointed out that a new company needed to create a network of providers as well as offer premium prices low enough to compete with BCBS, which had already cornered 70 percent of the market.

Don’t forget the bug spray

The U.S. is experiencing a widespread outbreak of West Nile virus, and the Louisiana Department of Health and Hospitals (DHH) reported in July that the first cases of 2015 had been identified in the state. Although most cases of West Nile are asymptomatic, everyone is at risk of infections. Those at least 65 years of age are at an increased risk. Even if no cases have been reported in a particular area, residents are still at risk as the virus is present all over the state. As of August 23, 2015, 20 cases in the state had been confirmed.

The DHH reminded citizens to take precautions each time they step outside. They should apply mosquito repellent to both clothing and exposed skin. Everyone can help reduce the risk. Eliminating standing water and cleaning clogged roof gutters will remove breeding grounds and can reduce the population by millions.